Construction and fuel costs determine the economics of electric generator technology, while markets and price drivers alter patterns of which type of capacity is being added, an EIA analysis finds. As for gas generation, construction costs in the US averaged at $965/kW in 2013 while building new wind power installationscost $1,895/kW, supported by tax credits at the time.
Open-cycle plants driven by combustion turbines, typically serve as peaker plants, and are less expensive to build than combined-cycle plants but more expensive to operate because of their relatively low energy conversion efficiency. CCGTs, are more efficient and less expensive to run so they have higher utilisation rates and tend to run at mid-merit on an intermediate basis or even as baseload plants.
Relative fuel prices are key to determine the dispatch of gas vs coal power plants – though in the US the tide has firmly turned in favour of gas generation.
Quick backup power is often provided by gas-fired combustion turbine or engine plants that can often be built within a less than a year. Decentralised power is making inroads as it helps meet near-term localised supply or reliability needs.
RES vs gas generators
Renewable energy sources (RES), often backed up by flexible gas generators, have also seen a substantial drop in construction costs. Solar additions in 2013 had average construction costs of $3,705/kW, according to EIA figures but costs have faltered since then so that solar PV is gearing up to compete with decentralised gas power on Capex.
Looking at solar photovoltaic (PV) projects in more detail, it turns out that using an axis-based tracking system was more expensive per kilowatt than fixed-tilt projects. “Tracking systems are generally used for larger projects and can increase system output” which, according to EIA analysts, “may justify the somewhat higher costs.”
Though average costs for projects using thin-film panels versus crystalline silicon panels were similar, new thin-film plants have a much larger capacity (~74 MW) than the new crystalline silicon plants (~7 MW) which influences the per-kilowatt costs.
Wind generators are the ‘cheapest-to-build’ RES, with average construction cost at just $1,895/kW. Yet, regardless of this cost advantage, the expiration of the US federal production tax credit in 2012 caused a plunge in new-build wind capacity, down to just 900 MW in 2013 from 13,084 MW in the previous year.
The tax credit was renewed in early 2013, but EIA analysts remarked that “given the lead times for a wind project and a change in the tax credit's eligibility requirements, very few wind plants were completed in 2013.” No more up-to-date data has been made available.